Personal Savings Allowance guide

Eco_Miser

Annlou53 wrote: »

Do you only have to pay tax on the interest?

In an interest-bearing account, yes. There are all sorts of other taxes to pay in other circumstances.

Annlou53 wrote: »

How much can I save in a regular savings account each year...is there a limit? I already know the Isa limit. Thanks

The amount you can save in a single regular savings account each year is limited by the terms and conditions of that account. The amount you can save across multiple accounts is limited only by the number of accounts you can find to open (and of course, by the amount you have available to save).

owl_fan

Advice please. I have several savings accounts earning very low rates of interest - most of my savings are in ISAs. I recently opened a National Savings account for the proceeds from selling a flat - I will buy a new flat soon. Meanwhile, the interest on that account alone will push me over the £1000 limit.
I understand that HMRC will change my tax code to apply tax to my savings interest. How do they know about all of my taxable savings accounts and will all be taken into account automatically, or do I need to declare them in some way? Thanks

polymaff

owl_fan wrote: »

Advice please. I have several savings accounts earning very low rates of interest - most of my savings are in ISAs. I recently opened a National Savings account for the proceeds from selling a flat - I will buy a new flat soon. Meanwhile, the interest on that account alone will push me over the £1000 limit.
I understand that HMRC will change my tax code to apply tax to my savings interest. How do they know about all of my taxable savings accounts and will all be taken into account automatically, or do I need to declare them in some way? Thanks

HMRC claim that they know all about everyone's institutional UK taxable savings income - although you will be held ultimately responsible for declaring all taxable income.

Arthurian

Should be done for you automatically.
https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance

Consumerist

owl_fan wrote: »

. . . How do they know about all of my taxable savings accounts and will all be taken into account automatically, or do I need to declare them in some way? Thanks

All UK banks and building societies are obliged to report interest payments to HMRC. You may have noticed recently that you have received notices from them of changes to Ts&Cs which incorporate that requirement. As said earlier, however, you will be held ultimately responsible for paying tax due on interest payments.

Interest from ISAs, of course, are tax free and don't need to be declared.

Dancinglady

Please could someone clarify ,that the personal savings threshold remains at £5000 above the standard tax threshold in the coming year ie as the personal allowance will rise to £11,500 in April 17 the low income savings starting threshold will rise to £16,500 + the £1000 that everyone gets ??
Many Thanks

ColdIron

Yup, see
https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

polymaff

Dancinglady wrote: »

Please could someone clarify ,that the personal savings threshold remains at £5000 above the standard tax threshold in the coming year ie as the personal allowance will rise to £11,500 in April 17 the low income savings starting threshold (1) will rise to £16,500 + the £1000 that everyone (2) gets ??
Many Thanks

1. Best not to invent your own terminology. Best, since 16/17, inclusive, to think in terms of allowances rather than thresholds. Not doing so has made 16/17 quite difficult to understand by both amateurs and professionals alike.

2. Some will get a £0, some a £500 and others a £1,000 Personal Savings Allowance

Dancinglady

Yes but there is a different rule for people on low incomes , my understanding is that in 16/17 you could earn up to £1700 in income and savings interest before paying tax , my question is does this rise to £17500 in line with the increase of the starting point for paying tax which goes from £1100-£11500. I understand that the other allowances are as above ,but it is different if you are on a low income , it is the low income threshold/allowance I am referring too
Many Thanks for any assistance

fabsaver

Dancinglady wrote: »

Yes but there is a different rule for people on low incomes , my understanding is that in 16/17 you could earn up to £1700 in income and savings interest before paying tax , my question is does this rise to £17500 in line with the increase of the starting point for paying tax which goes from £1100-£11500. I understand that the other allowances are as above ,but it is different if you are on a low income , it is the low income threshold/allowance I am referring too
Many Thanks for any assistance

Yes that is correct. As explained here http://www.moneysavingexpert.com/savings/tax-free-savings The £17,000 comprises £11,000 personal allowance, £5,000 starting savings rate limit and £1,000 personal savings allowance for basic rate taxpayers.

Thus for 2017/18 it will be £11,500 + £5,000 + £1,000 = £17,500.